A new fear has now entered the minds of importers that they may be charged with misdeclaration if they do not indicate the tariff item correctly. This is particularly after the new system called Accredited Clients Programme (ACP) was introduced. Under this system, the importers get the facility of quick clearance but they have to declare the goods and assess them properly.
The bills of entry are audited by the department afterwards. ACP requires that even the tariff classification and the rate of duty has to be written correctly. Now, the rate of duty can be correct, but the tariff item may be wrong. This is because the rates of duty are same but the tariff items can be different. For example, many types of machinery falling under different tariff items attract the same rate of duty. Now, an allegation of misdeclaration only for the tariff description is valid or not, that is the question.
I am writing this treatise to say that under the normal system, the declaration regarding the description of the goods is the only responsibility of the importers. They need not write the tariff item or the rate of duty at all. Even if they write these due to the prevailing convention, there cannot be any allegation of misdeclaration against them. That is because the courts have always held the view that classification under tariff is also the burden on Revenue.
Under the ACP, the position is some what different. Here the importer enters into an agreement with the Custom House to classify the goods imported themselves. They declare the goods, tariff items and the rate of duty. Thereafter, they submit it to the Custom House under the computerised system known as EDI (Electronic Data Interface). The computer of the Custom House checks the bills of entry with the data (tariff entry and the rate of duty of goods) which are already entered into the computers by the systems department.
Once the bills of entry are cleared by the computer, even if there is no signature by the appraiser before the duty is paid and goods cleared, it has to be assumed that Revenue has accepted the classification through computer. Therefore, the responsibility of Revenue to classify the goods remains. The legal burden of classification has to remain with Revenue. Just because in the ACP document, it is written that all details including tariff classification must be given correctly, it does not mean that if there is a mistake in declaring the tariff item, it is a misdeclaration.
This arrangement has been made in the ACP only to make it possible by the computers to process the papers (bills of entry) without the intervention of the appraiser. Legally, the position remains that the responsibility for correct declaration of goods remains with the importer and the responsibility for classification is with the Revenue. All judgments by the Supreme Court have been only on the subject of valuation and description of goods under the Section 111(m) of the Customs Act.
The conclusion is that both in the traditional system as well as in the ACP system, misdeclaration can only relate to the description of the goods and not the tariff item or the consequent rate of duty. Particularly if the rate of duty is declared and is correct, then no misdeclaration can be alleged merely because the declared tariff item is wrong. Even in the ACP it is clearly provided that if the declarations show non-compliance short of offence, the department will provide with feedback for improvement of compliance. So, Revenue’s attitude is based on cooperation and not confrontation.
